David Cay Johnston: 'Professional skeptic'
- Johnston is a former New York Times Pulitzer Prize-winning reporter and author of four books
- He is based in Brighton and often can be seen as a guest commentator on talk shows
David Cay Johnston is much in demand during these troubled economic times.
Since the public's attention has focused on the growing gap between rich and poor, Johnston has become an important voice in the debate about what to do.
As a former New York Times Pulitzer Prize-winning reporter and author of three books on financial inequalities, Johnston has a clear-eyed view of the great divide between the super-rich and the rest of American society.
Based in Brighton, Johnston reaches a national and sometimes international audience in both the written and spoken word.
In a given week, he might be seen as a guest commentator on such talk shows as MSNBC's The Ed Show and All In with Chris Hayes, who has described Johnston as "dogged, erudite and a first-rate storyteller."
Johnston contributes to a host of publications, including Newsweek and Al Jazeera America, and is on the faculty of Syracuse University College of Law, where the courses that he teaches include tax and property law reaching back to ancient Athens. He is also board president of Investigative Reporters & Editors, which promotes and provides training for such reporting.
He has edited and contributed to an anthology, Divided: The Perils of Our Growing Inequality, scheduled for publication in April, which features a wide range of voices of reform, including Sen. Elizabeth Warren, D-Mass., and New York Times columnist Paul Krugman.
"I wanted to give people a walk through, at ground level and at 30,000 feet, about this growing gap between the vast majority of Americans and the super-rich," Johnston said.
A common thread that runs through Johnston's almost five decades of investigative reporting and probative books is his willingness to examine the reality beneath the rhetoric to get to the bottom of the story.
"I am a moral scold. I see how people manipulate and exploit the system," said Johnston, who recently turned 65.
Johnston, who comes from modest means and began his journalism career in high school out of financial necessity, is not one to be intimidated.
A prime example is when, in 1980, Johnston was a reporter with the Los Angeles Times uncovering political spying by the Los Angeles Police Department.
At the time, Johnston went on a first date — for dinner — with Jennifer Leonard, whom he married two years later. She is now president and chief executive officer of the Rochester Area Community Foundation.
Los Angeles Police Chief Daryl Gates, who was the center of the spying controversy, wanted to let Johnston know that, while Johnston was digging into the scandal, he was keeping tabs on Johnston — and his blossoming relationship with Leonard.
"I was at a social event and he signaled everybody to go away. He then proceeded to recount to me the dinner that we had," said Johnston, who let the police chief know that he would not be deterred from uncovering what became a major story about police misconduct.
Johnston's strong-mindedness can also carry over to the newsroom.
"David has a history of butting up against editors. He sometimes bites off more than editors are willing to chew," said his longtime friend David Crook, who is editor of The Wall Street Journal Sunday.
At the same time, Johnston likes to tell journalism students of the importance of getting the person being interviewed to feel comfortable enough to open up. "Good reporting skills are good dating skills. You want the other person to be intimate with you — just in a different way," he said.
Skeptical eye
Rather than harp on "high taxes," Johnston puts a focus on who's paying taxes and who's getting the tax breaks.
In the first book of Johnston's trilogy on financial inequalities, his 2003 best-seller, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich — and Cheat Everybody Else, Johnston tells how the rich, through allies in Congress, shifted taxes onto everyone else.
A case in point: An industrial equipment-maker, Ingersoll-Rand, became legally based in the Bahamas — but had little more than a post office box there. The company paid the Bahamian government an annual fee of $27,653, while saving itself from paying $40 million in U.S. taxes the first year alone.
Although Johnston is now a registered Republican, the Republicanism he praises is that of Teddy Roosevelt. And he shows allegiance to no party in a political system corrupted by monetary interests.
"My political ideology is that I am a professional skeptic. In my lifetime, I have voted for people in the Independence Party, the Conservative Party, the Peace and Freedom Party, the Working Families Party, the Democratic Party and the Republican Party," he said.
Consumer advocate Ralph Nader praised Johnston on several levels.
"He relentlessly and accurately illuminates the dark crevices of the federal tax law that are created and manipulated by tax lawyers on behalf of giant corporations," said Nader.
Johnston, Nader added, brings a genuine boldness to the profession. "He is self-taught," Nader noted. "He has not been sandpapered by professional schools."
Mark Zupan, dean of the University Rochester's Simon Business School, said he has some "strong points of agreement" with Johnston.
"One of his consistent themes is how the political system gets corrupted by special interests," said Zupan.
But Zupan said that he parts ways with Johnston on how to address some problems — saying that Johnston seems to support a greater government role in some solutions.
Johnston responded by saying that he wants the least regulation needed to preserve competition, which has been stifled.
"There is nothing business people hate more than competition," said Johnston.
What went wrong
Johnston's three books on financial inequities leave little doubt who's at fault.
The Perfectly Legal part of the title to the first book of the trilogy points to how the law has come to serve large corporations rather than protect the ordinary taxpayer.
His next book, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill), was published in 2007 and was also a best-seller.
Among the financial injustices recounted by Johnston was $50 million in damages paid for by the taxpayer from a court case resulting from a 1991 fatal Amtrak derailment. A private freight company, CSX, was at fault for failing to maintain a critical rail switch — actions that a judge upholding the award described as "willful, wanton negligence."
The taxpayers ended up paying the $50 million because when Amtrak was formed in 1971, the freight railroads wanted to be insulated from claims arising out of Amtrak using their rails. "CSX simply sent a bill to Amtrak seeking reimbursement," writes Johnston. "Since the government owns Amtrak, what CSX did, in effect, was to stick the taxpayers with its bill."
His most recent book, published in 2012, The Fine Print: How Big Companies Use "Plain English" to Rob You Blind, concludes with such proposals as one urging local control of utilities.
"When you have a utility, like ours in Rochester owned by a Spanish company, they have no interest in our welfare and they are not thinking about the needs of our community," said Johnston, referring to Rochester Gas and Electric Corp.'s parent company, Iberdola SA.
What gets the public into trouble, said Johnston, is separating reward from responsibility, which is why Johnston's latest book, Fine Print, urges that banks be required to buy back the bad loans that they make.
"It used to be that when banks made a loan, they had to collect it, so they make good loans. Now these banks sell these loans, often to public-worker pension funds, and they don't care if they're bad loans. That's what got us in trouble," Johnston said.
Role of taxes
Johnston is no fan of the Tea Party, which he said has attracted many people who are more affluent than the average American but feel entitled to even more.
Many of its members, said Johnston, are ill-informed, as was the case with the Tea Party backer holding a sign saying: "Keep the government's hands off my Medicare," not realizing the government provides Medicare.
"Taxes are the foundation of civilization, and all private wealth depends on a sound system of taxes," said Johnston.
The problem, as Johnston sees it, is not taxes, but how the system is rigged — riddled with loopholes and tax breaks that have only widened the gap between rich and poor.
Johnston comes from modest means — his dad was a disabled World War II veteran who worked as a chef in Santa Cruz, Calif.
Before becoming a journalist, Johnston wanted to become a Los Angeles Police Department homicide detective, but he started working for two Santa Cruz weeklies while going to night high school because he needed the money.
Johnston eventually landed a reporting job with the San Jose Mercury News at the age of 19, and in the years ahead went on to work at the Detroit Free Press, Los Angeles Times, The Philadelphia Inquirer and The New York Times.
Johnston's first book, Temples of Chance: How America Inc. Bought Out Murder Inc. to Win Control of the Casino Business, which was published in 1992, drew from his stint from 1988 to 1991 as Atlantic City bureau chief for the Inquirer.
"The individual gamblers and their underworld backers who built Las Vegas, and who escaped both jail and hitmen, began selling out two decades ago, replaced by a new generation of owners: corporations specializing in the business of risk," writes Johnston.
While top reporters often gravitate to Washington, D.C., Johnston preferred to keep a critical distance from the powers that be.
"I'm not interested in what politicians say. I'm interested in what they do. I want to cover how things work, not how people claim they are going to make them work," said Johnston.
Johnston, who was recruited to work for The New York Times in 1995, won a Pulitzer in 2001 for his national reporting on tax issues and was three times a finalist.
Since 1993, when Leonard was named head of the Rochester Area Community Foundation, Johnston's home has been Brighton, where he and Leonard raised two children from their marriage and three of the six from Johnston's first marriage. After the move here, he would spend the weekdays at his newspaper jobs in Philadelphia and New York City and weekends with his family, though he increasingly spent time in the Rochester area.
In 2008, Johnston left the Times to pursue his writing of books, columns and essays — and has more freedom to speak his mind.
Although Johnston has over his career attended seven colleges, he does not hold a college degree. His encyclopedic knowledge is fueled by the five books a week he typically orders through Amazon.
Johnston became so well-schooled in tax law that when Syracuse University College of Law asked him what he wanted to teach, he proposed courses on the history of tax and property law, which he has taught at the law school for the past five years.
"I love to see how ancient ideas about taxes and regulations are reflected or ignored in the law," Johnston said.
JGOODMAN@DemocratandChronicle.com